Amazon (AMZN  ) was lower by 7% following the company falling short of analysts' estimates for Q2 revenue and warning about pressure on margins going forward. Many analysts were expecting some sort of deceleration in results for tech companies given the changes in the economy over the past year. Most of these predictions didn't work out, however, in Amazon's case, e-commerce growth has weakened as people resume normal shopping habits.

Inside the Numbers

In Q2, Amazon reported $15.12 in earnings per share which was better than expectations of $12.30 per share and a 47% increase from last year. Revenue missed analysts' forecasts at $113.1 billion vs $115.2 billion. This was still a 27% increase from last year but a major deceleration from 41% revenue growth last year.

The company attributed the miss to tough year-over-year comps as e-commerce revenue surged with parts of the country in lockdown and many people fearful about the coronavirus. It was the company's first revenue miss in 3 years.

Another reason for pessimism was weaker than expected Q3 guidance and commentary from management that growth should continue slowing for the next few quarters. Analysts were projecting Q3 revenue of $119.2 billion, however, the company issued guidance between $106 billion and $112 billion which equates to growth of 10% to 16%.

Other tech giants like Apple (AAPL  ) and Facebook (FB  ) also issued similar warnings about a slowdown in growth. Amazon's forecast for operating profit was in line with expectations due to lower costs from hiring and pandemic safety measures.

This quarter also marked the last quarter for CEO Jeff Bezos how as was replaced by former AWS CEO Andy Jassy. It's not a coincidence that AWS remains a bright spot as it grew revenue by 37% which was an acceleration from 32% in the previous quarter.

Stock Price Outlook

Amazon was one of the big winners of the pandemic. It was one of the first stocks to bottom and make new highs as it quickly became clear that e-commerce sales would spike with so many stores shutdown. Further, its cloud computing business also saw an acceleration.

Now, it's facing a more challenging environment as the world returns to normal with growth slowing. However, from a bigger picture point of view, the company remains in a good place especially as its cloud computing business continues to grow which naturally comes with much higher margins.

Regardless, the stock could be facing a bout of underperformance as many of the growth investors in the stock could be looking to sell. It should find support from more value-focused buyers as the stock's valuation is becoming more attractive, and margins are rising as cloud computing and advertising become a bigger part of the business.